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Monday, 18 March 2013

NBN: What do we agree on? Disagree on?

I'm wondering if it's possible to document where Grahame Lynch and I agree and disagree.

There will be areas that we'll never agree and won't change the others opinion.One area I think we are in furious agreement:

The basics {technologies, timeframes, guaranteed rates/latency, priority areas} have never been debated. This has to include a reasonable stab at a Cost-Benefit Analysis (CBA).

We probably disagree on needing a much larger view of CBA than solely the accounts of NBN Co and using a non-commercial Internal Rate of Return.

This was new to me and I thank Mr Lynch for it. I think the idea of modelling a reduced coverage of premises is good, as rollout can be delayed until the project is cash-flow positive. I have yet to understand the impact on the rollout of leaving slabs of brownfields copper around.

But unfortunately Jenkin also falls into the trap of assuming I am advocating a complete FTTN network and argues from that viewpoint. I don’t. His entire opus suffers from this misapprehension and assumes I am defending FTTN.

I am very happy for there to be as much FTTH as is cost-effective. Greenfields, definitely. Places where the copper cannot be upgraded, certainly. Fibre to the kerb or basement and then VDSL2 to many of the 30-35% of Australians in multi dwelling units with existing Cat 5 or other internal cabling. I’m happy with that given the difficulties in getting fibre to their premises, a policy that was the orginal intention of NBN Co itself.

Ditto, the prioritising of network remediation and investment in the places which cannot get +8Mbps ADSL now, which means that premises getting high speed Docsis 3.1 and other platforms are placed at the back of the queue. Suddenly we have a scenario where by reducing the extent of FTTH from 93% of premises to maybe just half overall, we still end up with most people getting 50Mbps to 100Mbps and everyone getting 25Mbps minimum.

Here's The List from Mr Lynch's article. (I've never met Grahame and don't presume to false closeness, hence the formalism that he has reciprocated with.)

1) Jenkin claims it is “a nonsense” to claim that an FTTN network replaces some of the copper with fibre2) Jenkin claims that elderly people and the remote get ten times bandwidth increase guaranteed – thus meaning they can all access telehealth services over the nbn.3) Jenkin claims that my point that we don’t need FTTH to see global TV channels is “bogus”4) Ross claims the NBN will end phone call charges. Jenkin claims he doesn’t understand my objections to this.5) Jenkin implies that only “an elite” can currently telecommute & the NBN’s universality changes this6) Jenkin says that just because medicare won’t fund telehealth in metro/fibre areas doesn’t mean it won’t happen or cannot be counted as a potential nbn benefit7) Jenkin argues that the failure of ftth networks in flooded areas was a backhaul problem common to all network access media & that FTTN is no better8) Jenkin suggests that it is “nonsensical” to acknowledge the power usage impacts of customer devices on a FTTH network10) Ross claims that the NBN's FTTH topology will be cheaper to maintain, ignoring that the most expensive part of the copper network – in the bush – is retained. Jenkin claims this is deeply wrong.11) Jenkin agrees with Ross that the cost of the NBN is a net zero16) Jenkin says “since 2005, telstra has steadfastedly demanded sole access to an FTTN it builds”.18) Jenkin dismisses NBN Co’s obvious plan to increase arpus through speed tier and contention charging imposts as “confused”19) Jenkin claims that the NBN is a response to the 15 year failure of the “free market”20) Jenkin defends Ross’ claim that the coalition policy will lead to local monopolies and inflated prices

This is an important point. Telstra cannot remove the copper, or turn-off copper services, until a Fibre Service Area (?) is "declared".

It will not – they will coexist in those allegedly narrow ducts for 18 months and NBN Co bears the cost of any damage done to the copper by the installation of the fibre. The copper will not be decommissioned until 18 months after the fibre is laid. Any issues with ducts will be pronounced in an FTTH rollout that is forced to remediate the existing copper.

How does the NBN Fibre fit in those ducts alongside copper?

How does Telstra remove the copper without disturbing Fibre services?

I need someone who works in this field to tell me how that can be done. I know active LAN/server-room cabling well enough and these changes are tricky...

I won't be sold on the replacement of large cable bundles with Fibre (to Nodes) as significantly affecting performance/errors. Whilst the majority of ADSL faults occur in these bundles, it's not due to cable defects but interference and reflection issues. Yes, some small fraction of the Local Loop Copper is small cables that will be reused from Nodes. Telstra in 2005 (ADSL2, 12Mbps) cited remediation and replacement of these would be a major cost.

I still hold the Technology Optimist view on the potential impact of Telehealth on our 9+% of GDP spent on Healthcare. As Dr Eric Topol of Scripps Institute observes, "Clinicians have no incentive to reduce Healthcare costs". If the gatekeepers aren't behind any change, let alone Major Reform, then it cannot happen.

Turning Telehealth potentials into actual reform and savings is a much bigger debate and a problem than larger than "build it and they will come". Mr Lynch is right, the NBN will produce diddly squat unless someone assumes responsibility for, and drives, the realisation of outcomes.

On 10Gbps SFP's. $94 is not what CISCO charge for them, neither will it be that little from whomever supplies the Nodes. The last time I went looking seriously for retail pricing on SFP's was a year ago. The 40Gbps and 100Gbps SFP's may have brought the pricing down on 10Gbps. Great news if so.

On simultaneous use of networks: I've worked on the coal-face of Telcomms service delivery long enough to know that dimensioning for peak-loads is the biggest economic challenge. Determining "just enough" is both a moving target and very subtle. Too much and you die under a mountain of debt, too little and customers revolt and leave because of inadequate levels of service: an optimisation tightrope.

If you don't dimension a phone network to handle Christmas Day, although it works the other 364 days, people will drop you in a trice if they have the chance. Similarly, if your Broadband network doesn't survive a Grand Final event, it's a bust.

This point I get and agree with, modulo the the ONT's will provide a Telephony (POTS) connection and that "Type 1" VLAN traffic with high QoS is directed as carrying voice, for a significant premium. How RSP will pass that on, I don't know:

Phone rentals as we know them today will end but not associated call charges.

I've lost track of the argument over resilience in natural/man-made disasters and war, revolution etc not covered by my household insurance. Active devices in the field lose resilience because of local power issues. We saw that with TransAct nodes in the 2003 fires. Are we arguing the same case? I suspect so.

Ross claimed FTTH would be better in a flood or a fire, I would argue it is one of several bad options given its power vulnerabilities.

On the total power-bill and the incremental cost of FTTN over FTTH. Mr Lynch makes a good point that the power-draw by new devices might outweigh all other concerns. I'm not sold... Consumers are demanding more power-efficient devices: Plasma displays are being replaced with LED illuminated LCD's.I can see arguments both ways. I think we agree that total electricity demand will rise with both FTTN and FTTH. We differ in how we want to account for the costs and who wears the charges.

This next point matters to those already with the worst phone services and no ADSL. If our clever researchers can figure out a way to run Fibre underground for twice the price of the hardware, that would change the economics. Otherwise these folk get Fixed Wireless and Satellite:

The copper network in the last 7% of the country will be retained and it accounts for more than a third of the cost of maintaining the network today.

The confusion of IRR and Gross Margin, EBITBA and Net Profit (before and after Tax) is immense.Mr Lynch is right in pointing out the incorrect usages and wrong inferences drawn.

On the various Telstra FTTN proposals: When I read the documents available on-line and Paul Fletchers detailed history, I read that Telstra wasn't offering open access like the NBN.

If correct, this is an important point. My limited reading/research hadn't turned this up and I've no reason to think it's been fudged:

All FTTN and FTTH proposals since 2008 from all parties have called for bitstream to replace ULL. This is uncontroversial and supported by all and it is quite frankly disappointing that Jenkin would perpetuate this meme.

I have an optimistic view on ARPU's, rising traffic volumes, and increasing profits caused by Demand Elasticity. This isn't blind faith, I saw this up close and personal in 7 years at O.T.C.: it made them one of the most profitable and cheapest International Telco globally.It's a topic that needs fuller analysis: it could be the surprise that really makes this project.

I think we agree on some basics.This is Mr Lynch's closing and for me it goes to the heart of the matter:

It lies in a proper cost benefit study that dispassionately examines all the technologies and their likely cost/performance paths, the one that should have been done in 2009 as a follow-up to the heavily redacted advice of the expert panel and the back-of-the-napkin plane trip. The study that the government itself demands of all other major infrastructure projects. That the Productivity Commission wants. That the Opposition wants. And that NBN Co itself has recently canvassed.

That is what is really required. And the bloggers and NBN fanbois/naysayers who argue their case 24/7 could actually then become participants in the digital economy rather than combatants in it.